Supreme Court of India
RAVI AGRAWALversusUNION OF INDIA AND ANOTHER
- Citation
- 2019 INSC 6
- Decided
- 3 January 2019
- Disposal
- Disposed off
- Bench
- A K SIKRI
Holding
The restriction that annuity or lump‑sum payments under Section 80DD are payable only after the death of the parent/guardian is a valid classification and does not violate Article 14.
Summary
Ravi Agrawal, a differently‑abled petitioner, filed a public‑interest writ under Article 32 seeking to compel the Union of India and LIC to allow annuity or lump‑sum payments from the Jeevan Aadhar insurance scheme to disabled dependents even while the parent/guardian is alive. The petitioner relied on a 2008 CBDT circular that barred any benefit until the proposer’s death, arguing that this violated the disabled’s right to equality under Article 14. The Court examined the purpose of Section 80DD of the Income Tax Act, 1961, which provides tax deductions for premiums paid for such policies, and noted that the statute expressly conditions payment on the death of the subscriber to secure the disabled’s future after the guardian’s demise. The Court held that this classification is reasonable, has a rational nexus to the legislative objective, and therefore does not infringe Article 14. It further observed that the judiciary cannot direct Parliament to amend the provision, though it urged the government to reconsider the policy. The writ petition was dismissed.
Issues considered
- The validity of the 2008 CBDT circular restricting annuity payment until the life assured’s death under Section 80DD.
- Whether the restriction under Section 80DD violates the right to equality under Article 14 of the Constitution.
- Whether the Court can direct amendment of Section 80DD to allow early payment of benefits.
Legislation cited
- Income Tax Act, 1961s. 80DD
Subjects
Income TaxSection 80DDDisabilityEqualityArticle 14Judicial ReviewLife InsuranceJeevan AadharPublic Interest Litigation
Judgment
8 [2019]
SUPREME COURT 1 S.C.R. 8
REPORTS [2019] 1 S.C.R.
A RAVI AGRAWAL
v.
UNION OF INDIA AND ANOTHER
(Writ Petition (Civil) No. 1107 of 2017)
B JANUARY 03, 2019
[A. K. SIKRI, ASHOK BHUSHAN AND
S. ABDUL NAZEER, JJ.]
Income Tax Act, 1961 – s.80DD – s.80DD provides for
incentive to the persons whose dependents are persons with disability
C – In order to give effect to the said special provision, LIC floated
insurance policy named ‘Jeevan Aadhar ’ for the benefit of
handicapped dependents – Petition filed in the interest of
handicapped children whose parents have taken Jeevan Aadhar
Policy (Table 114) of the LIC for the livelihood of their children –
D Grievance of petitioner pertained to Circular No. CO/CRM/PS/622/
23 dated January 24, 2008 issued by the Income Tax Department
which provided that no benefit can be paid to dependent till the
proposer/life assured survives – Prayer of petitioner was that by
incorporating such a provision, the respondents are denying the
benefit of the insurance to the handicapped persons to get annuity
E or lumpsum amount during the lifetime of the parent/guardian of
such a handicapped person, whereas the beneficiaries of other life
insurance policy are getting annuity during the lifetime of the person
who has taken insurance policy and this violated the fundamental
right of equality of the handicapped person enshrined in Art.14 of
F the Constitution – Prayer of petitioner was to suitably amend s.80DD
of the Act – Held: The purpose of enacting s.80DD is to secure the
future of the persons suffering from disability, namely, after the
death of the parent/guardian – s.80DD provides condition that
amount/annuity under the policy is to be released only after the
death of the person assured – This is the legislative mandate – This
G Court cannot give a direction to the Parliament to amend or make a
statutory provision in a specified manner – The Court can only
determine, in exercise of its power of judicial review, as to whether
such a provision passes the muster of the Constitutional Scheme –
Respondents successfully demonstrated that the main provision was
based on reasonable classification, which has a valid rational
H
8
RAVI AGRAWAL v. UNION OF INDIA 9
behind it and there is a specific objective sought to be achieved A
thereby – Although the petitioner may be justified in pointing out
that there could be harsh cases where handicapped persons may
need the payment on annuity or lumpsum basis even during the
lifetime of their parents/guardians, however, it is for the Legislature
to take care of these aspects and to provide suitable provision by
B
making necessary amendments in s.80DD – Respondent No.1 to
relook into this provision by taking into consideration all the aspects
and explore the possibility of making suitable amendments – Writ
petition disposed of – Social Justice – Disability – PIL – Constitution
of India – Art.14.
Disposing of the Writ Petition, the Court C
HELD: 1. Section 80DD of the Act is a provision made by
the Parliament under the Act in order to give incentive to the
persons whose dependents are persons with disability. Incentive
is to give such persons concessions in income tax by allowing
deductions of the amount specified in Section 80DD of the Act in D
case such parents/guardians of dependents with disability take
insurance policies of the nature specified in this provision.
Purpose is to encourage these parents/guardians to make regular
payments for the benefit of dependents with disability. In that
sense, the Legislature, in its wisdom thought it appropriate to E
allow deductions in respect of such contribution made by the
parent/guardian in the form of premium paid in respect of such
insurance policies. Of course, this deduction is admissible only
when conditions stipulated therein are satisfied. [Para 15][20-F-
H]
F
2.1 Insofar as insurance policy in question is concerned, it
incorporates a condition to the effect that the amount shall not
be given to the handicapped persons during the lifetime of the
parent/guardian/life assured. This is in conformity with Section
80DD(2)(b) of the Act. To some extent, the grievance of the
petitioner may be justified in this behalf in the plea that when G
there is a need to get these funds even for the benefit of
handicapped persons, that will not be given to such a person only
because of the reason that the assured who is a parent/guardian
is still alive. This would happen even when the entire premium
towards the said policy has been paid. The policy does not have H
10 SUPREME COURT REPORTS [2019] 1 S.C.R.
A maturity claim. Thus, after making the entire premium for number
of years, i.e. during the duration of the policy, the amount would
still remain with the LIC. That may be so. However, the purpose
behind such a policy is altogether different. As noted from the
provisions of Section 80DD as well as from the explanatory
memorandum of the Finance Bill, 1998, by which this provision
B
was added, the purpose is to secure the future of the persons
suffering from disability, namely, after the death of the parent/
guardian. The presumption is that during his/her lifetime, the
parent/guardian would take care of his/her handicapped child.
Further, such a benefit of deduction from income for the purposes
C of tax is admissible subject to the conditions mentioned in Section
80DD of the Act. The Legislature has provided the condition
that amount/annuity under the policy is to be released only after
the death of the person assured. This is the legislative mandate.
There is no challenge to this provision. [Paras 16, 17, 18][21-A-
F]
D
S.K. Dutta, Income Tax Officer v. Lawrence Singh Ingty
[1968] 2 SCR 165 – followed.
State of U.P. and Another v. Kamla Palace (2000) 1
SCC 557 : [1999] 5 Suppl. SCR 452; State of A.P. and
E Others v. Nallamilli Rami Reddi and Others (2001) 7
SCC 708 : [2001] 2 Suppl. SCR 287– relied on.
2. The petitioner may be justified in pointing out that there
could be harsh cases where handicapped persons may need the
payment on annuity or lumpsum basis even during the lifetime of
F their parents/guardians. For example, where guardian has become
very old but is still alive, though he is not able to earn any longer
or he may be a person who was in service and has retired from
the said service and is not having any source of income. In such
cases, it may be difficult for such a parent/guardian to take care
of the medical needs of his/her disabled child. Even when he/she
G has paid full premium, the handicapped person is not able to
receive any annuity only because the parent/guardian of such
handicapped person is still alive. There may be many other such
situations. However, it is for the Legislature to take care of these
aspects and to provide suitable provision by making necessary
H amendments in Section 80DD of the Act. In fact, the Chief
RAVI AGRAWAL v. UNION OF INDIA 11
Commissioner for Persons with Disabilities has also felt that like A
other police holders, Jeevan Aadhar policy should also be allowed
to mature after 55 years of age of the proposer and the annuity
amount should be disbursed through the LLCs or National Trust.
Respondent No.1 should relook into this provision by taking into
consideration all the aspects, including those highlighted by the
B
Court in this judgment, and explore the possibility of making
suitable amendments. [Paras 22, 23][23-E-H; 24-A-B]
Case Law Reference
[1999] 5 Suppl. SCR 452 relied on Para 19
[1968] 2 SCR 165 followed Para 20 C
[2001] 2 Suppl. SCR 287 relied on Para 21
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil)
No. 1107 of 2017.
Under Article 32 of the Constitution of India. D
Vikramjit Banerjee, ASG, Prashant Singh, Merusagar Samantray,
Rohit Rao, Leetesh Krishna, Ms. Anil Katiyar, R. Chandrachud, Karan
Sharmaa, Nitin Thukral, Advs. for the Respondents.
Petitioner-in-person.
E
The Judgment of the Court was delivered by
A. K. SIKRI, J. 1. This writ petition is filed by the petitioner,
Ravi Agrawal, under Article 32 of the Constitution of India as a Public
Interest Litigation. The petition is stated to be filed in the interest of
handicapped children whose parents have taken Jeevan Aadhar Policy F
(Table 114) from the Life Insurance Corporation of India (for short,
‘LIC’) for the livelihood of their children. The petitioner himself is a
differently abled person as he is suffering from Cerebral Dysphagia.
The petitioner also is an income tax assessee whose Permanent Account
Number (PAN) issued by the Income Tax Department is AAPPA5222M.
He has stated that he has no personal interest in the subject matter G
raised in this petition which he has filed on behalf of the handicapped
children.
2. Section 80DD of the Income Tax Act, 1961 (hereinafter referred
to as the ‘Act’) provides for payment of annuity of lump sum amount for
H
12 SUPREME COURT REPORTS [2019] 1 S.C.R.
A the benefit of a dependant, being a person with disability, in the event of
the death of the individual or the member of the Hindu Undivided Family
(HUF) in whose name subscription to the scheme stipulated in the said
provision has been made. Though it is a long provision, for our purposes
it would be suffice to reproduce sub-sections (1), (2) and (3) thereof,
which are as under:
B
“80DD. Deduction in respect of maintenance including
medical treatment of a dependant who is a person with
disability.— (1) Where an assessee, being an individual or a Hindu
undivided family, who is a resident in India, has, during the previous
year,—
C
(a) incurred any expenditure for the medical treatment (including
nursing), training and rehabilitation of a dependant, being a person
with disability; or
(b) paid or deposited any amount under a scheme framed in this
D behalf by the Life Insurance Corporation or any other insurer or
the Administrator or the specified company subject to the conditions
specified in sub-section (2) and approved by the Board in this
behalf for the maintenance of a dependant, being a person with
disability, the assessee shall, in accordance with and subject to
the provisions of this section, be allowed a deduction of a sum of
E seventy-five thousand rupees from his gross total income in respect
of the previous year:
Provided that where such dependant is a person with severe
disability, the provisions of this sub-section shall have effect as if
for the words “seventy-five thousand rupees”, the words “one
F hundred and twenty-five thousand rupees” had been substituted.
(2) The deduction under clause (b) of sub-section (1) shall be
allowed only if the following conditions are fulfilled, namely:—
(a) the scheme referred to in clause (b) of sub-section (1)
provides for payment of annuity or lump sum amount for
G
the benefit of a dependant, being a person with disability,
in the event of the death of the individual or the member of
the Hindu undivided family in whose name subscription to
the scheme has been made;
H
RAVI AGRAWAL v. UNION OF INDIA 13
[A. K. SIKRI, J.]
(b) the assessee nominates either the dependant, being a person A
with disability, or any other person or a trust to receive the payment
on his behalf, for the benefit of the dependant, being a person
with disability.
(3) If the dependant, being a person with disability, predeceases
the individual or the member of the Hindu undivided family referred B
to in sub-section (2), an amount equal to the amount paid or
deposited under clause (b) of sub-section (1) shall be deemed to
be the income of the assessee of the previous year in which such
amount is received by the assessee and shall accordingly be
chargeable to tax as the income of that previous year.”
C
3. As per clause (b) of sub-section (1), if an assessee, being an
individual or a HUF, has paid or deposited any amount under the scheme
framed in this behalf by the LIC or any other insurer etc., such an assessee
is entitled to deduction of a sum of Rs.75,000/- from his Gross Total
Income in respect of the previous year. It is subject to the conditions
which are specified in sub-section (2) of Section 80DD. We are D
concerned with the condition mentioned in clause (a) of sub-section (2).
As per this condition, disabled dependant would get annuity or lumpsum
payment in the event of death of the individual or the death of the member
of the HUF, in whose name subscription to the scheme has been made.
In order to give effect to the aforesaid special provision meant for the E
benefit of persons with disability, LIC has floated insurance policy named
‘Jeevan Aadhar (Table 114)’ for the benefit of the handicapped
dependants. Accordingly, those assessees who get the Jeevan Aadhar
policy for the benefit of handicapped dependants and pay or deposit the
amount under the said policy become entitled to the deduction mentioned
in Section 80DD of the Act. Synopsis of the said policy introduced by F
the LIC gives a glimpse of the salient features of this plan and is, thus,
reproduced below:
“A) Synopsis of Plan
1) Age at entry (life assured) – Minimum 22 years, Maximum 65 G
years.
(handicapped dependant – 1 year)
The age of the life assured and handicapped dependant are
required to be admitted on the basis of standard age proof.
H
14 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 2) Maximum premium ceasing age – 75 years.
3) Premium paying term – 10, 15, 20, 25, 30 & 35 years.
4) Policy term this is whole life plan.
5) Sum assured – Minimum 50000, Maximum – no limit.
B 6) Mode of payment – Yearly, Half-Yearly, Quarterly, Monthly,
SSS, Single also.
7) Rebate on mode of payment – Yearly 3% of tabular premium,
Half-yearly 1.5% of tabular premium, Quarterly/ Monthly/SSS –
no rebate.
C
8) Rebate on high sum assured -
25,000 to 49,999 – Re.1/- per 1000 sum assured
50,000 and above – Rs.2/- per 1000 sum assured.
9) All extra mortality rate class are allowed.
D
10) All female categories i.e. I, II, III are alloewd.
11) Only NMS is allowed, not NMG.
12) Besides proposal form No. 3000, the life assured (proposer)
will be required to submit an addendum declaring the disability of
E the handicapped dependant and a certificate stating that
handicapped dependant is suffering from a permanent physical
disability (including blindness) or having mental retardatoin as per
rules A physician, a surgeon, an oculist or a psychiatrist working
in Govt hospital should clearly state that due to disability such
F person’s capacity for normal work or engaging in a gainful
employment or occupation is considerably reduced.”
4. The grievance of the petitioner pertains to Circular No. CO/
CRM/PS/622/23 dated January 24, 2008 which is issued by the Income
Tax Department. As per this Circular, no benefit can be paid to the
dependant till the proposer/life assured survives. Relevant portion of
G
this Circular is extracted below:
“Representations were received for allowing annuity payments
for the disabled dependant before death of parents/life assured
after a certain age. But CBDT/Govt. Of India have refused to
H
RAVI AGRAWAL v. UNION OF INDIA 15
[A. K. SIKRI, J.]
do so. Hence it is clarified that no benefit can be paid to dependant A
till the proposer/life assured survives.”
5. The Jeevan Aadhar plan also mentions the aforesaid Circular
on the basis of which clause pertaining to maturity claim in the policy is
mentioned as under:
B
“F. MATURITY CLAIM
1) IN FORCE POLICY OR FULLY PAID UP POLICY
Policy does not have maturity claim. The provisions of maturity
claim under whole life policies i.e. after completing the age of 80
years by life assured: is not applicable under this policy. C
Representations were received for allowing annuity payments for
the disabled dependant before death of parents/life assured after
certain age. But CBDT/Govt. Of India have refused to do so.
Hence it is clarified that no benefit can be paid to dependant till
the proposer/life assured survives. (co/crm/ps/622/23 dated 24/ D
01/2008).”
It is, thus, clear that even when the entire subscription is paid
under this policy meant for handicapped persons, this policy does not
have maturity claim. The amount is payable to the dependant only on
the demise of the proposer/life assured. E
6. Submission of the petitioner is that by incorporating such a
provision, the respondents are denying the benefit of the insurance to
the handicapped persons to get annuity or lumpsum amount during the
lifetime of the parent/guardian of such a handicapped person, whereas
the beneficiaries of other life insurance policy are getting annuity during
F
the lifetime of the person who has taken insurance policy. This, according
to the petitioner, violates the fundamental right of equality of the
handicapped person enshrined in Article 14 of the Constitution.
7. The petitioner states that he had lodged a complaint before the
Insurance Regulatory and Development Authority of India (IRDA) on
G
August 06, 2014. However, the said Authority in its reply expressed its
inability to provide any help having regard to the afore-mentioned Circular
dated January 24, 2008 of the CBDT. The petitioner even approached
the Court of the Chief Commissioner for Persons with Disabilities raising
the aforesaid grievance. The Chief Commissioner heard the matter on
H
16 SUPREME COURT REPORTS [2019] 1 S.C.R.
A various dates and passed the order advising the CBDT to once again
examine the matter in consultation with the Department of Empowerment
of Persons with Disabilities, Ministry of Social Justice and Empowerment,
as well as National Trust. Relevant portion thereof reads as under:
“11. During the hearing on 10.03.2015, it was observed that
B Central Board of Direct Taxes (CBDT) had already made the
submission that the issue of allowing for annuity payment to the
dependant with disability under Jeevan Aadhar Policy to commence
after certain age of a subscriber at 55, 58 or 60 years was
considered during the budgetary exercise for 2007-08 and the
same was not found to be acceptable.
C
12. In the light of the mandate of the Chief Commissioner for
Persons with Disabilities, no direction can be given to CBDT or
LIC as there is no allegation of non implementation of the stated
policy or its terms & conditions. It is, however, the view of this
office that Jeevan Aadhar is not the only LIC Policy that gives
D the benefit of Income Tax exemption and only a few parents of
persons with disabilities may be tax payers to be able to avail the
tax exemption, such a well intentioned policy should not be linked
to such benefits as tax exemption. As the primary objective of
the policy is to benefit a person with disability, he/she should start
E getting the annuity as early as possible in his/her lifetime.
13. With regard to the allegation of the complainant in Case No.
2602/1093/2014 that the LIC Agents and professionals told him at
the time of selling the policy that his child would start getting pension
@ Rs.2000/- per month for every one lakh of insured amount is
F concerned, LIC is advised to investigate the matter and intimate
the outcome to the complainant under intimation to this Court within
two months from the date of receipt of these Record of
proceedings. In case it is established that it is a case of mis-
selling, then LIC is advised to suitably compensate the complainant.
G 14. As National Trust was not represented during the hearing
despite the notice and it has suggested that insured amount should
be disbursed to the beneficiaries through its LICs, National rust is
directed to get in touch with the LIC and obtain the details of the
Jeevan Aadhar Policy holders. After obtaining the consent of the
policy holders for distribution of annuity through LLCs National
H
RAVI AGRAWAL v. UNION OF INDIA 17
[A. K. SIKRI, J.]
Trust shall inform LIC for making National Trust as the nominee/ A
Trusty for receiving the amount of annuity in respect of such policy
holders on the terms & conditions as may be finalized between
LIC and National Trust and ensure that a mechanism is put in
place to disburse the amount of annuity to the disabled dependants
of the policy holders till the dependant is alive.
B
15. Both the complainants strongly felt that like other policy holders,
Jeevan Aadhar Policy should also be allowed to mature after 55
years of age of proposer and the annuity amount should be
disbursed through the LICs of National Trust.
16. In the light of the demand of the complainants, CBDT is C
advised to once again examine the matter in consultation with
Department of Empowerment of Persons with Disabilities, Ministry
of Social Justice & Empowerment and National Trust.”
8. The Chief Commissioner had even sent reminder thereof to
the CBDT to look into the matter. However, nothing moved at the level D
of the CBDT. In fact, the petitioner thereafter lodged his grievance
with the Prime Minister’s Office through Centralised Public Grievance
Redressal and Monitoring System Portal on October 15, 2015. As he
did not receive any response, it provoked the petitioner to file the instant
writ petition with the following prayers:
E
“(a) Issue a writ of Mandamus or any other appropriate writ,
order of direction to Respondents No 1 to amend Section 80DD
of the Income Tax Act to allow for the payment of annuity or
lump sum amount to a person with disability on attaining the age
of 55/58 years by the guardian/parent of disabled person, in addition
to in the event of death of the guardian/parent. F
(b) Issue a writ of Mandamus or any other appropriate writ,
order or direction to Respondents No 2 to amend the Scheme of
Jeevan Aadhar Policy (Table 114) to allow for the payment of
annuity or lump sum amount to a person with disability on attaining
the age of 55/58 years by the guardian/parent of disabled person, G
in addition to in the event of death of the guardian/parent.
(c) Issue a writ of Mandamus or any other appropriate writ,
order or direction to Respondents No 2 to pay annuity or a lump
sum amount to a person with disability, the guardian/parents of
H
18 SUPREME COURT REPORTS [2019] 1 S.C.R.
A whom already attained the age of 55/58 or will attend the age of
55/58 years in the future.
(d) Issue a writ of Mandamus or any other appropriate writ,
order or direction to Respondent No 2 to make proper arrangement
for the payment of an annuity/pension to the handicapped
B dependant after the death of the guardian, without any further
formality except the filing of death certificate of the parents/
guardian. All the paper formalities for the payment of annuity/
pension should be completed by the LIC after premium paying
term of the policy and a certificate should be issued by the LIC to
the effect that all the formalities for the payment of annuity/pension
C has been completed, except filing of death certificate of parents/
guardian. This issuing of the certificate should be conclusive proof
for releasing of annuity/pension, pending till filing of death certificate
of parents/guardian.
(e) Pass such other orders and further orders as may be deemed
D necessary on the facts and in the circumstances of the case.”
9. In essence, the grievance of the petitioner is that benefit of
Jeevan Aadhar policy should not be deferred till the death of the assessee/
life assured and it should be allowed to be utilised for the benefit of the
disabled person even during the lifetime of the assessee.
E
10. Union of India has filed its affidavit giving justification for the
aforesaid course of action. In this regard, it is submitted that vide Finance
Act (No.2), 1998, Section 80DD was substituted for Sections 80DD
and 80DDA. The earlier Section 80DD provided for a deduction of
Rs.15,000/- to an individual or HUF on account of any expenditure
F incurred for the medical treatment (including nursing), training and
rehabilitation of a dependant relative of an individual or member of HUF.
The substitution was done to provide for composite Section in respect of
deduction for expenditure on medical treatment, rehabilitation etc. and
for payment made under a scheme of LIC or any other insurer for the
G dependant disabled person. Submission is that in effect Section 80DD
amalgamates the provisions of the two sections, namely, 80DD and
80DDA. Thus, both erstwhile Section 80DDA and present Section 80DD
provide that the annuity or lump sum amount for the benefit of the
dependant who is a person with disability will be disbursed only after the
death of the subscriber. Jeevan Aadhar scheme of LIC has been
H
RAVI AGRAWAL v. UNION OF INDIA 19
[A. K. SIKRI, J.]
designed keeping in mind the tax benefits under Section 80DDA/80DD A
of the Act.
11. It is also submitted by respondent No.1/Union of India that the
aforesaid provision was specifically provided for in the Act keeping in
view the fact that the guardians of children with disability are always
faced with the grim reality about the need for maintenance of the disabled B
after the death of the primary care giver, i.e. the parent or the guardian.
Many of them would like to deposit some amount during their lifetime in
some special instrument which would ensure payment of a reasonable
sum regularly to the disabled on their death. Thus, a separate deduction
from Gross Total Income of a specified amount deposited in a year in
any scheme of LIC or any other insurer specifically framed for providing C
recurring or lump sum payment for the maintenance and upkeep of a
handicapped dependant after the death of the assessee and approved by
the CBDT in this behalf was incorporated in the statute. As the scheme
was designed to, to a great extent, to assuage the anxiety in the minds of
parents/guardians of handicapped dependants about the destiny of their D
wards on their death and, therefore, to allow for annuity payments to the
handicapped dependant under Jeevan Aadhar policy to commence after
a certain age of the subscriber is not possible.
12. Meeting the argument of the petitioner based on Article 14 of
the Constitution of India, it is argued that the deduction under Section E
80DD of the Act has been specifically provided for persons with disability.
This is a valid classification for providing specific regime for this class of
persons. The stated objective of the scheme was to assure the parents/
guardian of a dependant with disability of regular payment of amount for
the care of such dependant after the death of the parent/guardian.
Attention is drawn to the explanatory memorandum relating to Finance F
Bill, 1998, which is as under:
“Rationalisation of benefits available to parents and guardian of
physically handicapped and disabled dependant.
Under the existing provisions of section 80DD, a deduction of G
Rs.15,000/- is allowed to an individual or Hindu Undivided Family
in respect of expenditure incurred on medical treatment of a
handicapped dependant. Section 80DDA allows for a separate
deduction to a parent or guardian in respect of deposits upto
Rs.20,000/- made specified schemes of Life Insurance
H
20 SUPREME COURT REPORTS [2019] 1 S.C.R.
A Corporation or Unit Trust of India. It has been felt that the parents
or guardian of handicapped dependants may not have to incur
expenditure on medical treatment of a handicapped dependant
every year. However, the parent or the guardian would always
feel the need to provide for the future maintenance of the disabled
dependant. The existing provisions do not take such situations
B
into account. In order to allow a choice to the parent or the
guardian to spend either on the medical treatment of or for the
future need of the handicapped dependant, as the case may be,
the Bill seeks to provide a new section 80DD. With this provision,
the parent or the guardian could claim a deduction upto Rs.40,000/
C - for the medical treatment and for future needs of the handicapped
dependant in the manner most suited to his needs. The existing
sections 80DD and 80DDA would get consequentially merged
with increase in overall limit of deduction from Rs.35,000 to
Rs.40,000/-.”
D 13. Number of judgments were cited by the learned Additional
Solicitor General appearing for the Union of India to placate the argument
of discrimination based on Article 14 of the Constitution. Insofar as
respondent No.2/LIC is concerned, its simple answer is that the clause
in the policy is as per the prescribed norm approved by the CBDT. Of
course, LIC has also supported the reasons given by Union of India
E behind the aforesaid Circular.
14. We have considered the respective submissions.
15. At the outset, it may be observed that Section 80DD of the
Act is a provision made by the Parliament under the Act in order to give
F incentive to the persons whose dependants are persons with disability.
Incentive is to give such persons concessions in income tax by allowing
deductions of the amount specified in Section 80DD of the Act in case
such parents/guardians of dependants with disability take insurance
policies of the nature specified in this provision. Purpose is to encourage
these parents/guardians to make regular payments for the benefit of
G dependants with disability. In that sense, the Legislature, in its wisdom
thought it appropriate to allow deductions in respect of such contribution
made by the parent/guardian in the form of premium paid in respect of
such insurance policies. Of course, this deduction is admissible only
when conditions stipulated therein are satisfied.
H
RAVI AGRAWAL v. UNION OF INDIA 21
[A. K. SIKRI, J.]
16. Insofar as insurance policy is concerned, it incorporates a A
condition (which is impugned in the present writ petition) to the effect
that the amount shall not be given to he handicapped persons during the
lifetime of the parent/guardian/life assured. This is in conformity with
Section 80DD(2)(b) of the Act.
17. To some extent, the grievance of the petitioner may be justified B
in this behalf in the plea that when there is a need to get these funds
even for the benefit of handicapped persons, that will not be given to
such a person only because of the reason that the assured who is a
parent/guardian is still alive. This would happen even when the entire
premium towards the said policy has been paid. The policy does not
have maturity claim. Thus, after making the entire premium for number C
of years, i.e. during the duration of the policy, the amount would still
remain with the LIC. That may be so. However, the purpose behind
such a policy is altogether different. As noted from the provisions of
Section 80DD as well as from the explanatory memorandum of the
Finance Bill, 1998, by which this provision was added, the purpose is to D
secure the future of the persons suffering from disability, namely, after
the death of the parent/guardian. The presumption is that during his/her
lifetime, the parent/guardian would take care of his/her handicapped
child.
18. Further, such a benefit of deduction from income for the E
purposes of tax is admissible subject to the conditions mentioned in Section
80DD of the Act. The Legislature has provided the condition that amount/
annuity under the policy is to be released only after the death of the
person assured. This is the legislative mandate. There is no challenge
to this provision. The prayer is that Section 80DD of the Act be suitably
amended. This Court cannot give a direction to the Parliament to amend F
or make a statutory provision in a specified manner. The Court can only
determine, in exercise of its power of judicial review, as to whether such
a provision passes the muster of the Constitutional Scheme. Though,
there is no specific prayer in this behalf, but in the body of writ petition,
argument of discrimination is raised. Here, we find that the respondents G
have been able to successfully demonstrate that the main provision is
based on reasonable classification, which as a valid rational behind it
and there is a specific objective sought to be achieved thereby.
H
22 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 19. In State of U.P. and Another v. Kamla Palace, (2000) 1
SCC 557, this Court, while considering a fiscal statute in relation to Article
14 of the Constitution, has stated as under:
“11. Article 14 does not prohibit reasonable classification of
persons, objects and transactions by the legislature for the purpose
B of attaining specific ends. To satisfy the test of permissible
classification, it must not be “arbitrary, artificial or evasive” but
must be based on some real and substantial distinction bearing a
just and reasonable relation to the object sought to be achieved by
the legislature. (See Special Courts Bill, 1978, Re, seven-Judge
Bench; R.K. Garg v. Union of India, five-Judge Bench.) It was
C further held in R.K. Garg case that laws relating to economic
activities or those in the field of taxation enjoy a greater latitude
than laws touching civil rights such as freedom of speech, religion
etc. Such a legislation may not be struck down merely on account
of crudities and inequities inasmuch as such legislations are
D designed to take care of complex situations and complex problems
which do not admit of solutions through any doctrinaire approach
or straitjacket formulae...”.
20. Further, in S.K. Dutta, Income Tax Officer v. Lawrence
Singh Ingty, (1968) 2 SCR 165, the Constitution Bench of this court
E held as under:
“8. It is not in dispute that taxation laws must also pass the test of
Article 14. That has been laid down by this Court in Moopil Nair
v. State of Kerala. But as observed by this Court in East India
Tobacco Co. v. State of Andhra Pradesh, in deciding whether a
F taxation law is discriminatory or not it is necessary to bear in mind
that the State has a wide discretion in selecting persons or objects
it will tax, and that a statute is not open to attack on the ground
that it taxes some persons or objects and not others; it is only
when within the range of its selection, the law operates unequally,
and that cannot be justified on the basis of any valid classification,
G that it would be violative of Article 14. It is well settled that a
State does not have to tax everything in order to tax something. It
is allowed to pick and choose districts, objects, persons, methods
and even rates for taxation if it does so reasonably.”
H
RAVI AGRAWAL v. UNION OF INDIA 23
[A. K. SIKRI, J.]
21. In State of A.P. and Others v. Nallamilli Rami Reddi and A
Others, (2001) 7 SCC 708, this Court held:
“8. What Article 14 of the Constitution prohibits is “class
legislation” and not “classification for purpose of legislation”. If
the legislature reasonably classifies persons for legislative purposes
so as to bring them under a well-defined class, it is not open to B
challenge on the ground of denial of equal treatment that the law
does not apply to other persons. The test of permissible
classification is twofold: (i) that the classification must be founded
on intelligible differentia which distinguishes persons grouped
together from others who are left out of the group, and (ii) that
differentia must have a rational connection to the object sought to C
be achieved. Article 14 does not insist upon classification, which
is scientifically perfect or logically complete. A classification would
be justified unless it is patently arbitrary. If there is equality and
uniformity in each group, the law will not become discriminatory,
though due to some fortuitous circumstance arising out of peculiar D
situation some included in a class get an advantage over others so
long as they are not singled out for special treatment...”
22. The petitioner may be justified in pointing out that there could
be harsh cases where handicapped persons may need the payment on
annuity or lumpsum basis even during the lifetime of their parents/ E
guardians. For example, where guardian has become very old but is still
alive, though he is not able to earn any longer or he may be a person who
was in service and has retired from the said service and is not having
any source of income. In such cases, it may be difficult for such a
parent/guardian to take care of the medical needs of his/her disabled
child. Even when he/she has paid full premium, the handicapped person F
is not able to receive any annuity only because the parent/guardian of
such handicapped person is still alive. There may be many other such
situations. However, it is for the Legislature to take care of these aspects
and to provide suitable provision by making necessary amendments in
Section 80DD of the Act. In fact, the Chief Commissioner for Persons G
with Disabilities has also felt that like other police holders, Jeevan Aadhar
policy should also be allowed to mature after 55 years of age of the
proposer and the annuity amount should be disbursed through the LLCs
or National Trust.
H
24 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 23. In the aforesaid circumstances, we dispose of this writ petition
by urging upon respondent No.1 to have a relook into this provision by
taking into consideration all the aspects, including those highlighted by
the Court in this judgment, and explore the possibility of making suitable
amendments.
B
Devika Gujral Petition disposed of.
C
D
E
F
G
H
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